Global stocks turn lower on weak data
SEOUL, South Korea - Global stock markets dropped Wednesday after reports on China's manufacturing activity indicated lingering weaknesses in the world's second-largest economy, and U.S. consumer confidence dropped for a second month.
Britain's FTSE 100 was down 0.7 percent to 6,186 while Germany's DAX fell 0.7 percent to 10,194. France's CAC 40 slid 0.7 percent to 4,473.
Futures augured a weak start on Wall Street: Dow and S&P futures both were down 0.4 percent.
Two surveys showed persisting weakness in China's factory activity last month. An official index by the Chinese Federation of Logistics & Purchasing, based on a survey of factory purchasing managers came in at 50.1 points in May. Numbers above 50 indicate expansion of factory activity while those below 50 indicate contraction. The private Caixin/Markit survey was more pessimistic, with activity falling to 49.2 last month from 49.4 in April.
"Overall, China's economy has not been able to sustain the recovery it had in the first quarter and is in the process of bottoming out," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group. "The government still needs to make full use of proactive fiscal policy measures accompanied by prudent monetary policy to prevent the economy from slowing further."
Reports released on Tuesday showed U.S. consumer confidence fell in May for a second month and is now at the lowest level since November. On Wednesday, the Organisation for Economic Co-operation and Development cut its global growth forecasts and warned of a "low-growth trap" in which weak growth expectations among consumers and businesses become self-fulfilling.
Asian stock markets began uneven but closed mostly lower. Japan's Nikkei 225 finished 1.6 percent lower at 16,955.73 while South Korea's Kospi inched down less than 0.1 percent to 1,982.72. Hong Kong's Hang Seng index fell 0.3 percent to 20,760.98 while China's Shanghai Composite Index dropped 0.1 percent to 2,913.51. Australia's S&P/ASX 200 slumped 1 percent to finish at 5,323.20.
Benchmark U.S. crude oil fell 67 cents to $48.43 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 88 cents on Tuesday. Brent crude, used to price international oils, gave up 71 cents to $49.18 a barrel in London.
The dollar weakened to 109.31 yen from 110.71 yen. The euro strengthened to $1.1161 from $1.1131.